The maxim “never let a good crisis go to waste” has been variously attributed to Sir Winston Churchill, Niccolo Machiavelli and, most recently, Rahm Emanuel. The crises in question could have ranged from the Dunkirk evacuation to the collapse of the Florentine Republic or the 2008 financial meltdown, depending on your preference. Regardless of who was the most likely originator of an admittedly overworked precept, the message was straightforward enough: take control in the face of adversity.
For investors this could mean exploiting market panics to acquire high-quality assets at temporary discounts, as initial anxieties give way to a sense of opportunity. It could even extend to contrarian strategies, by betting against the baying mob during periods of extreme pessimism.
But the maxim shouldn’t stand as some kind of pedagogical straitjacket; rather, it’s a simple reminder that every crisis starts life as a risk, and the flipside of risk is opportunity. So the real knack lies in recognising risks ahead of time and formulating effective responses.